Bank of England Extends Stablecoin Regulations Feedback Deadline; AFME Raises Security Token Concerns
Summary:
The Bank of England has deferred its deadline for feedback on a discussion paper regarding stablecoin regulations to February 12th. Meanwhile, the Financial Conduct Authority sustained its February 6th deadline. The AFME positively acknowledged the UK's regulatory initiatives concerning stablecoins but expressed apprehensions about the treatment of securities tokens. The AFME also suggested delaying some aspects of the proposal, particularly regarding stablecoins issued internationally, until global frameworks and established overseas markets are in place. Stablecoin regulations are set to be enacted in the UK in 2025.
The Bank of England (BOE) has extended its deadline for responses to its discussion paper on stablecoin regulations, pushing back the date to the morning of February 12th from the initial February 6th deadline. In contrast, the Financial Conduct Authority (FCA) maintained its original February 6 deadline. As per the new schedule, The Association for Financial Markets in Europe (AFME) submitted their commentary to the FCA punctually. These discussion papers, first introduced on November 6th, represent an initial step toward broad crypto-asset regulation, although each organization's approach varies.
The BOE’s paper mainly deals with the implications of a sterling-backed consumer-centric stablecoin in systemic payment systems, such as transaction mechanisms and criteria for wallet suppliers. The FCA's paper covered a spectrum of stablecoin applications, focusing on audits and reporting, prudential needs, and backing and custodial responsibilities, with the aphorism “same risk, same regulator outcome” as its key principle.
The FCA will also regulate custodial responsibilities with the BOE hinting at additional stipulations in scenarios like off-chain transactions and Anti-Money Laundering and Know Your Customer parameters for decentralized wallets. Stablecoin services that "pose systemic threats in their own right or offer critical services to systemic payment systems utilizing stablecoins or approved stablecoin service providers" may fall under joint regulation.
James Kemp, AFME’s director of technology and operations, lauded the UK’s initiatives in a statement, labeling it a "positive development". At the same time, he expressed reservations about the handling of security tokens, which by the FCA's definition are "crypto assets that already meet the Regulated Activities Order's definition of a specified investment under the Financial Services and Markets Act 2000 and are hence already regulated." Kemp proposed that these tokens are intrinsically securities and should be treated as such.
In his statement, the AFME director also proposed that the FCA should defer some aspects of the proposal, especially those relating to stablecoins issued abroad, pending the establishment of global frameworks and mature overseas markets. The UK is slated to enact stablecoin regulations by 2025.
Published At
2/6/2024 10:08:04 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.